Contrasting Readings from Two Sentiment Indicators
By
Rennie on Monday, July 13th, 2009 at 2:41 am
Nasdaq/NYSE Volume Ratio triggered another short-term sell signal Friday given the second consecutive close back over the 1.75 level (see this July 6th column for a recent track record). Pull up the long-term charts of NYSE and NASDAQ volume (specifically the 20-day moving average) for a different illustration of just how lopsided things have become. Note that average NYSE volume is running near multi-year lows, but average NASDAQ volume is running near multi-year highs. Strange as it may seem, this indicator suggests we’re in the midst of the most speculatively-dominated environment ever, more so than even 1999-2000. Yet it’s a telling sign that commodity trading advisors don’t share the enthusiasm of NASDAQ traders. Starting in mid-1999 and continuing pretty much right through the end of the bear market in 2003, this ‘smart money’ group remained decidedly bearish (based on weekly readings from Market Vane). They were quick to turn bullish in 2003 when the speculative excess had been fully wrung out of stocks, and they remained bullish until a prescient shift at the beginning of 2008. They remain decidedly bearish as a group, with this past week’s 41% reading representing a fresh two-month low. It’s been over a year since this survey registered a single reading in bullish territory (above 50%). With the Nasdaq/NYSE Volume Ratio in record-high territory, and smart money not even coming close to adopting a bullish outlook, the long-term sentiment outlook is not positive.
Contrasting Readings from Two Sentiment Indicators
By Rennie on Monday, July 13th, 2009 at 2:41 amNasdaq/NYSE Volume Ratio triggered another short-term sell signal Friday given the second consecutive close back over the 1.75 level (see this July 6th column for a recent track record). Pull up the long-term charts of NYSE and NASDAQ volume (specifically the 20-day moving average) for a different illustration of just how lopsided things have become. Note that average NYSE volume is running near multi-year lows, but average NASDAQ volume is running near multi-year highs. Strange as it may seem, this indicator suggests we’re in the midst of the most speculatively-dominated environment ever, more so than even 1999-2000. Yet it’s a telling sign that commodity trading advisors don’t share the enthusiasm of NASDAQ traders. Starting in mid-1999 and continuing pretty much right through the end of the bear market in 2003, this ‘smart money’ group remained decidedly bearish (based on weekly readings from Market Vane). They were quick to turn bullish in 2003 when the speculative excess had been fully wrung out of stocks, and they remained bullish until a prescient shift at the beginning of 2008. They remain decidedly bearish as a group, with this past week’s 41% reading representing a fresh two-month low. It’s been over a year since this survey registered a single reading in bullish territory (above 50%). With the Nasdaq/NYSE Volume Ratio in record-high territory, and smart money not even coming close to adopting a bullish outlook, the long-term sentiment outlook is not positive.